Is the Net Promoter Score (NPS) fit for purpose?
Is the 20+ year-old Net Promoter Score robust enough to measure today’s complex B2B customer relationships?
We explain why The Relationship Rating (TRR) delivers a better way to gain real insight.
Since 2001, the Net Promoter Score (NPS), developed by Fred Reichheld, has been a widely known measurement of customer satisfaction. Its popularity and broad use have been attributed to its simplicity and transparent methodology, yielding higher response rates.
The NPS question is framed as follows: “How likely would you be to recommend Company X to a friend or colleague?” (1 being least likely, 10 most likely). The insight behind this question is that a recommendation is a personal reflection on Company X, so truthful answers are far more likely.
But is the NPS robust enough for today’s complex B2B customer relationships? Its simplicity allows B2B companies to easily get feedback from many different individuals across geographies and accounts. But in the end the NPS is just a number.
At Verity Relationship Intelligence we believe that in order to use NPS as an effective B2B customer relationship management tool, the rating methodology can be improved, and that the question should not be posed in isolation.
Let’s take those points one at a time.
Net Promoter Score calculation methodology vs The Relationship Rating methodology
The NPS score is calculated by subtracting the percentage of low scorers’ “Detractors” (rating 1-6) from the percentage of high scorers’ “Promoters” (rating 9-10). It therefore removes any respondents that score 7 or 8. But excluding them removes a large proportion of respondents. In fact, based on Verity’s B2B norms, 47% of respondents score 7 or 8. We believe that a methodology that excludes almost half of all respondents is essentially flawed. Moreover, focusing only on the extremes can make the results very volatile and therefore lead to wrong conclusions. This is especially of concern for small datasets, such as when looking at NPS scores for individual key accounts. These are an important KPI in the B2B context.
It’s for exactly that reason that we developed The Relationship Rating (TRR), which uses the Net Promoter Score question but takes the average rating of all the respondents. The Relationship Rating methodology ensures the entire respondent population is represented, and therefore the overall rating moves more slowly over time which is more reflective of the nature of B2B relationships.
NPS followed by an open-ended WHY question
Any metric of customer satisfaction is useful, but true insight comes from feedback – the WHY. We therefore believe the rating question should always be followed by one more open-ended second question – namely “What makes you feel this way?”.
We’ve found that adding this one question to the NPS question is all you need to open-up a wealth of insights. The question is relevant to any respondent, regardless of their seniority, job function or B2B industry. That’s because it doesn’t guide responses, but captures the spontaneous “top of mind” reasons behind a customer’s rating. With this question #2, we have the context we need for each rating to truly inspire action and improvements.
Fact is, you don’t need 25 additional questions to understand your operational and strategic performance. This one additional question is sufficient, and the response rate is not compromised (our B2B global average response rate is 55%).
Finally, there is no effective measurement (either B2B or B2C) without robust analytics and reporting capabilities to make the data actionable. Here at Verity Relationship Intelligence we provide leadership teams with easy-to-understand reports that identify the key areas for operational, behavioural and strategic improvements, empowering them to take action with confidence.
Is there a better way to measure B2B customer satisfaction than the Net Promoter Score (NPS)? We say yes.
